Argos aims for Christmas peaks

Argos aims for Christmas peaks

Wednesday 24 October 2007 19.00 EDT
First published on Wednesday 24 October 2007 19.00 EDT

Home Retail, the group behind the Argos and Homebase chains, said it was prepared for another "technology Christmas" trading period, dominated by sales of flat-screen televisions, video consoles and in-car satellite navigation systems.

The group - which traditionally makes 70% of its profits in the half-year to March - is well positioned to benefit as electricals, particularly televisions, become more affordable. Chief executive Terry Duddy said he looked forward to sales volumes for flat-screen TVs smashing peaks achieved last Christmas - more than off-setting price deflation of about 20%.

The company gave no update on trading since September 1, but Mr Duddy said he "remained cautious given the consumer outlook". Six-month comparable sales at Argos rose 1.4% while declining 2.5% at Homebase, including an exceptionally poor period for the home improvements industry during the rainy summer.

Mr Duddy pointed to interest rate rises and indications of a slowing housing market as warning signs on consumer confidence, but added that neither Homebase nor Argos had seen signs of a spending slowdown in the half-year.

Despite the mixed sales performance, the group increased pre-tax profits by 40% to £150m. This was achieved in part by more direct sourcing of product lines from the far east. The rise was also helped by an easing in cost pressures and a weak dollar, enhancing group buying power.

Home Retail added five Argos stores during the half-year, taking the total to 685. The total number of Homebase outlets will reach 338 by Easter next year.